Hyundai Merchant Marine could order 20,000 teu container ships in order to boost its competitiveness against its larger peers, according to a South Korean news site.

MTN claimed that the orders could be placed in March 2018 for delivery in 2021. By then, HMM’s fleet of container vessels would be increased from 350,000 teu to 600,000 teu.

A spokesman for HMM told Fairplay that the company had yet to decide on ordering more newbuildings, having already ordered five VLCCs and two 11,000 teu container ships this year.

The spokesman said, “HMM is reviewing and discussing with industry experts on various ways to grow further as a global carrier. However, there has been no decision made about ordering new container ships. The vessel size, when to order, and how these will be financed are all undecided.”

HMM is now the country’s flagship carrier after Hanjin Shipping’s collapse in February.

The liner operator itself pulled off a remarkable escape from bankruptcy in June 2016 after reaching agreements with its bondholders and tonnage providers and raising more than USD1 billion from a string of asset sales.

In July, at KDB’s request, international consultancy AT Kearney carried out an assessment that showed HMM would need KRW10 trillion to build large container ships and acquire terminal assets.

KDB chief Lee Dong-geol told a parliamentary session in October that the state policy lender, which is now HMM’s largest shareholder and creditor, is reviewing AT Kearney’s suggestion of providing a war chest.

HMM’s collaboration with the 2M alliance comprising Maersk Line and Mediterranean Shipping Company expires in March 2020 and given its relatively small size among liner operators amid the current wave of consolidation, the company may find the going tough should it find itself without an alliance partner.

The largest container ships in HMM’s fleet are only 13,000 teu, while the company’s rivals have been ordering and taking delivery of vessels with capacity nearing 20,000 teu. There is therefore concern that HMM could lag behind its competitors.

On 13 October, HMM sold shares to raise USD614 million for newbuilding plans and recently placed firm orders for five VLCCs, with options for another five tankers, with Daewoo Shipbuilding & Marine Engineering. The company also ordered two 11,000 teu container ships from Hanjin Heavy Industries & Construction.

MTN reported that the proceeds from the share sale are expected to be partly used to finance HMM’s new series of newbuildings. The 20,000 teu container ships are expected to require KRW200 billion, while the government’s recently created ship finance provider, Korea Shipping & Maritime Transportation, would cover the remaining costs.

The company now owns eight overseas terminals, including the recently purchased terminal that Hanjin Shipping used to operate in Algeciras, Spain.

It has also announced plans to develop ports in Vietnam as part of a wider plan to own more terminal assets in Southeast Asia to take advantage of lower handling costs and help restore profitability.

Robert Willmington, IHS Markit shipbuilding analyst, said, “HMM will be compelled to order new ULCS tonnage sooner rather than later simply to maintain its present market share. With only two 11,000 teu ships presently on order, HMM has the smallest orderbook of all the intercontinental ocean carriers. Furthermore, its largest ships have a capacity of 13,000 teu during a period when most major carriers are moving towards ships in excess of 18,000 teu.

“Clearly it has no choice but to place orders in the near future otherwise HMM will become a minor vessel operator at best. As the company is now virtually the South Korean flag carrier there is a will on the part of the company, and indeed the South Korean government, to ensure HMM exceeds by expansion. For these reasons we expect HMM will soon place an order for large box ships at a domestic shipyard.”